Pirelli's net profit rises 30 percent

Milan, Italy -- Pirelli SpA reported significant growth in all economic indicators for the 12 months ended December 2005. At the consolidated level the Group achieved double digit growth in revenues (+14.6%), operating profit (+32%) and net profit (+31.3%) compared with the previous year.

The company said Pirelli Tyre reached its profitability target (return on sales of 9%) originally set for 2006, due to increased selling prices, despite higher raw material costs.

Revenues in the tyre unit in the year to 31 Dec. 2005 amounted to 3633 million euros, with an increase of 11.7 percent compared on the 3253 million reported in 2004. However, the growth was only 7.4% on a like-for-like basis and net of exchange rate effects. Pirelli said the growth came from an improved price/mix component and a confirmation of the continuing focus on the top-of-the-range segment.

EBITDA in the tyre unit was 518 million euros (14.3 percent of sales), up 14.6 percent from 452 million euros in 2004. Operating income stood at 329 million euros, an increase of 19.6 percent from 275 million euros the previous year. Net profit (after financial charges of 34 million euros and fiscal charges of 97 million euros) was a positive 198 million euros, an increase of 18.6% from 167 million euros reported in 2004.

At end December 2005, said the company, the headcount was 23 673 , including 2958 with temporary contracts. A year earlier, the headcount was 21 513, of whom 2576 were temporary).

In its statement, Pirelli said the tyre unit "reinforced the growth trend of 2004, reaching a higher rate of growth than the reference market in which it operates in terms of profitability. The excellent performance of 2005 was the result of a continued focus on the product mix, price increases and volume increases, which more than offset higher energy and raw material costs in the context of less-than-brilliant market demand. In the consumer segment (Cars and Moto) the group saw a rise in volumes and sales, particularly in North America, and in the Premium segment there were improvements in all geographical area and for the Winter products in Europe . In the Industrial segment, 2005 saw a positive growth trend, especially in original equipment, and from the launch of truck radial production in Yanzhou, China , which will serve the Chinese market and also South East Asia and Australia."

Press release from Pirelli